Singapore, where the population rose 26 percent in the decade to 2012, offers businesses the best property-rental value compared with the size of its economy, while Mumbai ranks last, according to Savills Plc.
The CHART OF THE DAY shows the total costs to set up a business in 10 major cities, comprising home and office rentals, and related transaction costs, divided by per-capita gross domestic product of a city or country, which is an indicator of business potential. Singapore’s ratio of 16.1 was the lowest, while the 74.7 score for India’s business capital ranked it last on the “value for money” scale, the London-based property broker said.
Standard Chartered Plc has the global headquarters of its private bank and its biggest trading floor in Asia in Singapore, which was ranked as the easiest place to do business for seven straight years by the World Bank. The island-nation has also become a commodities hub as Asia’s biggest oil-trading market for BHP Billiton Ltd., Exxon Mobil Corp. and Chevron Corp. It overtook Japan as Asia’s biggest foreign-exchange center for the first time as of April, the city’s central bank said earlier this month.
“The value of real estate is higher where more corporate revenue can be generated,” said Yolande Barnes, director of Savills world research. “It is worth paying more to accommodate an executive team in Singapore with its high GDP than in the low GDP Mumbai.”
Singapore’s property costs, at $1 million per year, are sixth highest of the 10 cities, based on Savills criteria. Prices were calculated for residential and office spaces for 14 employees plus households, Savills said. The highest total costs were $1.63 million per year in Hong Kong and the cheapest $444,000 in Mumbai, the rankings showed.
Sydney, Moscow and New York City were next after Singapore in terms of business value, the survey showed.
While the approach is creative, it’s not how the economy works, said Vishnu Varathan, a Singapore-based economist at Mizuho Bank Ltd. “The survey is trying to normalize results for earning potential, but I think per-capita GDP is a very misleading barometer because the question is how much of it is split between wages and how much in profits.”